Collecting rare wine can be a lucrative and fun investment—but high-stakes buyers should be wary of sour grapes
by David Foxley | February 18, 2016 11:50 am
The sale of counterfeit wines at the highest tier is a costly problem that’s compounding at an alarming rate. It was recently revealed that Benoît Violier, the 44-year-old acclaimed French-Swiss chef who stunned the haute-culinary world by taking his own life last month, was likely the recent victim of a wine scam that set him back between $790,000 and $2 million. And though industry insiders have been hard at work building up an arsenal of high-tech tools to identify fraudulent wines before such costly mistakes are made, guarantees are few in wine collecting. There are, however, certain things oenophiles can do to better their odds of purchasing a great bottle at a fair price.
“The number one thing to do is make sure you’re working with a reputable auction house,” says Maureen Downey, founder of Chai Consulting, an international wine-collection management firm founded in 2005. According to Downey, who has advised the FBI and U.S. Dept. of Justice in a number of major counterfeit-wine cases, the list of reputable domestic auction houses is relatively short: Sotheby’s, Christie’s, Bonhams, Heritage, Zachys.
Smaller online and regional houses, she warns, typically don’t have the in-house experts and tools to vet problematic wines. Nor do they have the resources to take a major loss on a wine they acquire that ends up being sub-par. “Counterfeiting is the top concern. But the other two things that are of huge concern are provenance and condition,” explains Downey, who testified for billionaire Bill Koch in his successful $17 million legal battle over 24 bottles of counterfeit Bordeaux in 2013. Even if a wine is ultimately deemed authentic, it still may have been stored or moved improperly—overheated, frozen, exposed to direct sunlight—negatively impacting its condition.
Collectors should always get a second or third opinion, in addition to any offered by a reputable auction house, and hire a disinterested expert or experts to inspect bottles of wine before making a sizeable bid. “Any reputable auction house will work with a prospective buyer and their advisor to make sure that happens,” says Downey.
Once a buyer has done their due diligence and builds their collection, it’s critical that they also consider keeping their investment safe from unforeseen problems at home. “The number one mistake we see with seasoned wine enthusiasts is a great cellar that is woefully unprotected,” says Katja Zigerlig, VP of art, wine & jewelry insurance at AIG Private Client Group. “Wine of all vintages is fragile, vulnerable to risk and susceptible to loss when a cellar floods or the air conditioning malfunctions. Therefore, making certain that collections are covered by a specific wine insurance policy that includes protection against loss caused by flooding, heat or theft is key to ensuring peace of mind when acquiring new finds at auction.”
In addition to the better-known varietals that are a mainstay for sellers of spurious vino—namely rare and fine Burgundys and Bordeauxs—there has been an increase in the number of counterfeit Champagnes on the market of late. Just this month, Italian police arrested eight people involved in a scheme to pass off 9,200 bottles of cheap sparkling wine as Moët & Chandon Imperial Brut, whose collective market value would have been about $380,000.
Asked what types of wine are poised to increase in value over the near term—given that market rates for the better known vintages and producers are essentially set—Downey expects to see a surge in the price of noteworthy Italian wines, especially Super Tuscans, some of the better Brunello di Montalcinos and certain wines out of Piedmont. This, of course, implies that the number of counterfeit versions of those wines will likely spike, too.
“[Wine fraud] is not going away,” adds Downey, who recently helped launch a website, winefraud.com, a membership service that helps collectors and vendors spot suspicious wines by using the same assets employed by experts. “In fact, I think people can expect to hear a lot more about it in the news.”
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